Former US Treasury Secretary Henry Paulson Jr. explained why in the near future hard times and a likely collapse await the US dollar.
The impending collapse of the American national currency against the backdrop of the unfolding economic crisis is widely spoken. There are many reasons for this, which are often used by domestic experts in constructing their assumptions.
However, in our opinion, the point of view from a specialist who knows the system from the inside may be of most interest. And who in this case knows such a system better than the American Minister of Finance, even if the former?
So, recently, the former head of the US Treasury, Henry Paulson, said that as a result of the economic consequences of the global pandemic, the status of the dollar as the main reserve currency will change.
This will happen for the following main reason:
The fact is that for many decades the dollar has been a reliable way for investors to wait out the crisis. As, for example, it was in 2008 during the global financial crisis. However, now, the American currency will no longer be able to fully perform such a function.
And it’s not at all because of the actions of China, which, of course, can at one moment sell off US government debt in the amount of $ 1.2 tons and collapse it badly.
According to Henry Paulson, it is precisely the situation within the United States itself that can undermine the dollar. He is confident that at the moment, to preserve the national currency, it is necessary to take measures to contain the state debt, and not to increase the budget deficit. Otherwise, the fall of the dollar can not be avoided.
Also, the former head of the financial department in his own article for Foreign Affairs noted that the American administration should carefully introduce new sanctions, watching how they then affect the state economy.
Paulson believes that despite the increasing pressure on the dollar by the Chinese yuan, the currency of the PRC will not be able to become the main world currency until the PRC comes to multiple progress in the transition to a market economy.
And here Paulson and I naturally disagree. Since such arguments look most strange when they sound in relation to the first world economy (China), which achieved success and outplayed its main competitor precisely in the paradigm of the US-created modern economic model.